Cousin v. Trans Union

[Administrator]

Cousin v. Trans Union
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Terry Cousin v. Trans Union Corporation,
Http://laws.1p.findlaw.com/5th/9960429cv0.htm1 24, 246 F.3d 359,
(5th Cir. 3/21/01) Judges Garwood, DeMoss, and Parker

Plaintiff was awarded $40,000 actual damages and $4.47 million in
punitive damages, after proving that defendant willfully violated
the FCRA and for defaming plaintiff. The Fifth Circuit reversed
the jury and vacated the entire award and rendered in favor of
defendant. The Court held that no reasonable jury could have found
that defendant willfully violated the FCRA or acted with malice.
The Court also found that plaintiff had insufficient evidence of
actual damages. PlaintiffÂ’s identity was stolen by his estranged
brother who committed application fraud. After many disputes,
plaintiff sued the CRAÂ’s and duped creditors (Cousin I). The case
settled and Trans Union paid a cash settlement with promises to
correct plaintiffÂ’s credit reports. Thereafter, fraud account data
kept being reported by Trans Union though Trans Union knew the
false data was fraud-related. PlaintiffÂ’s counsel again disputed
the data and cited the settlement agreement. Trans Union kept
reporting it. Counsel was denied credit and suffered other
damages. Plaintiff filed this action, which proceeded to jury
trial. After the large award, Trans Union moved for remittitur.
In a scathing opinion, the Trial Judge denied Trans UnionÂ’s Motion
and described Trans UnionÂ’s conduct as reprehensible and willful.
Here, the Fifth Circuit, based on the cold record, reserved the
entire award in a 2-1 split opinion. One Judge wrote a dissent
stating he would have affirmed the juryÂ’s award. The Fifth Circuit
discussed at length Trans UnionÂ’s cloaking (suppression) process.
The cloak only attaches to a false account for twelve months.

Cousin had asserted 1681e(b) claims. Trans Union concedes the
inaccuracy of its disclosures, but claims some of those were not
"consumer reports" and cannot form the basis of a 1681e(b)
claim(s). Trans Union argues that 1681e(b) requires publication to
a third party and a credit denial must be sustained to state a
claim. Interestingly, Trans Union argued that qualified immunity
afforded 1681g disclosures to consumers per 1681h(e) necessarily
distinguishes the January and February 1997 disclosures from
consumer reports like the one sent to Haefner. [[Consistent with
Whitesides McAnly, etc., re: 1681h(e)]].

Trans Union argued that the Court should deem Trans UnionÂ’s
cloaking procedure to be reasonable as the matter of law thereby
substituting the juryÂ’s opinion. Trans Union claimed it did not
now the cloaking system would fail. Trans Union argued that itÂ’s
subscribers should have told Trans Union that the subscribers would
re-report the bad data. Trans Union claimed it should not be
penalized for the subscribersÂ’s actions. The Court disagreed.
Citing Stevenson, 987 F.2d 288, 293. The Court found that allowing
inaccurate information back onto a credit report after deleting it
is negligent. It is "incumbent on the CRA to permanently delete
and cloak the erroneous information."

The Court found adequate proof that Trans Union knew that its
cloaking procedure was defective and unreasonable. Trans Union
argued that plaintiff must have a credit denial. Trans Union
argued that the only alleged denial, Haefner, was no denial at all.
Thus, if no denial occurred then "Cousin suffered no injury." Trans
Union insists publication to a third person and a denial of credit
are prerequisites to a 1681e(b) claim. "As for the consumer report
sent to Heafner in November 1996, Trans Union maintains that there
was not evidence indicating that Heafner utilized the report to
deny credit to Cousin."

Rather than addressing the issue framed by Trans Union, the Court
found "insufficient evidence of actual damages to warrant the
juryÂ’s award." Trans Union argued that the credit grantor
considering the auto loan request did not see a Trans Union report.
The Court concluded that there "was no legally sufficient evidence
for a reasonable jury to find that a Trans Union credit report was
utilized to deny Cousin credit."

The Court determined that a reasonable jury cold not have concluded
that Cousin was denied credit based on a Trans Union report. The
Court erased the compensatory award of $50,000.00. The Court found
the only possible actual damage was plaintiffÂ’s emotional distress
which was "very limited and legally insufficient." The Court found
plaintiff "cannot recover actual damages for that distress." citing
a very rigid decision in Patterson, 90 F.3d 927, 938, regarding
emotional distress. Such an intangible loss requires "a degree of
specificity which may include corroborating testimony or medical or
psychological evidence in support of the damage award."

The Court next addressed the finding of willfulness of Trans Union.
The Court noted that malice or evil motive need not be proven.
Trans Union argued that plaintiff had not proven that Trans Union
willfully misrepresented material information or concealed
information.

Here, plaintiff asserted Trans Union willfully violated 1681e(b) by
willfully reinserting the GMAC tradeline into plaintiffÂ’s report.
Trans Union also cited more egregious cases where Courts failed to
find willfulness. The Court noted that "Cousin essentially
concedes in his response brief that Trans Union did not willfully
dredge up the GMAC tradeline and reinsert it into CousinÂ’s consumer
report."

Plaintiff argued that willfulness was proven by Trans UnionÂ’s re-
insertion of the false, previously disputed and deleted data.
Further, that Trans Union knew of the problem of re-reporting but
failed to correct it. Also, Trans Union used an obviously faulty
cloak retention policy.

The Court simply rejected each argument and found a lack of
sufficient evidence to support a fining of a willful violation of
1681e(b). The Fifth Circuit proposed to again raise the hurdle on
plaintiffÂ’s burden under 1681n.

Last, but not least, the Court shot down plaintiffÂ’s defamation
claim. The burden of proof is "that the defendant when he
published the words –(1) either knew they were false, or (2)
published them in reckless disregard of whether they were true or
not. See Gulf Publishing Co. v. Lee, 434 So. 2d 687, 695 (Miss.
1983) (citing Reaves v. Foster, 200 So. 2d 453, 458-59 (Miss.
1967))."

The Court failed to find a report issued as a third party which
evidenced any malice by Trans Union. The opinion is very detailed
but one would expect it to be to have erased a $4.52 million, plus
dollar award.

The dissenting opinion concurred wit the trial judgeÂ’s denial of
remittitur.